The CEO of Composable Finance has strongly refuted allegations of legal wrongdoing in his decentralized finance (DeFi) infrastructure platform, aired by the company’s former chief technology officer, Karel Kubat.
On February 20, Karel Kubat, former CTO of Composable Finance, announced on Twitter that had abandoned the company. He also launched a series of accusations against his former company and its CEO.
In his post, Kubat says that resigns because the company has not provided financial statements to him or the community and because he does not have an overview of the company’s financial health.
However, he said he suspects CEO Omar Zaki, who has been legally barred from raising funds for companies, He participated in raising Series A funds for the company in violation of a cease and desist order from the United States Securities and Exchange Commission.
Kubat said that too suspicion that Zaki’s role in the alleged project that ended in a rug pull, Bribe, was “much bigger than he publicly stated”.
In response Following Kubat’s resignation, he tweeted Spaces for an Ask Me Anything on February 20, in which he strongly denied all allegations. He claimed that, to the best of his knowledge, all of the company’s actions had been conducted in accordance with the law.
1/ We’re sorry to announce that Composable Finance has parted ways with our former CTO.
While this naturally prompts questions and concerns, our team is committed to addressing these questions and alleviating any concerns.
— Composable Finance (@ComposableFin) February 20, 2023
In response to allegations of a lack of financial transparency at the company, Zaki stated that the company is private and cannot publicly disclose financial information.
However, “We remain fully confident that we have sufficient resources, personnel and technology to carry out our strategies […] there is nothing that worries me or that should worry the public”, stated.
Zaki also denied violating any SEC orders, stating that the Series A fundraiser was conducted entirely offshore and complied with the laws of the countries in which it took place. Zaki stated that the company retained legal counsel to ensure that no laws were being violated, explaining:
“Those allegations are incorrect, Series A was designed as an offshore sale of utility tokens and we had outside counsel advising on the offer. […] I had made it very clear that all Composable offerings were made with sufficient legal advice.”
Regarding the claim that Composable was involved in the Bribe project, Zaki stated flatly: “We do not participate in the Bribe project.”
Composable Finance develops a cross-chain bridging and messaging protocol. In February 2022, it raised over $100 million through a parachain auction on Polka Dot. Ten days after the fundraiser, well-known blockchain detective ZachXBTm managed to expose the CEO of the company, known as “0xbrainjar”, revealing that the CEO is Omar Zaki.
In an April 1, 2019 settlement, the SEC accused Zaki of “repeatedly misleading investors in the Fund about assets under management, fund performance, and fund management” during his role as an executive at Warp Finance. and ForceDAO. As part of the deal, Zaki was prohibited from raising money for investors in the United States.
However, the SEC’s action was a civil cease and desist order, and it is understood that Zaki has not been convicted of violating any criminal law.
ZachXBT too accused Zaki of having been involved in the past in the Bribe project, an alleged rug pull scam.
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